Accounting for Leases and Corporate Investment

• 成果类型: Article
• 署名作者: Chen, Ciao-Wei; Correia, Maria; Urcan, Oktay
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; University of London; London School Economics & Political Science
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0406
• 发表日期: 2023
• 页码: 109-133
• 关键词: cross-country differences; operating leases; stock-market; incomplete contracts; VALUE-RELEVANCE; INFORMATION; disclosure; RECOGNITION; constraints; TECHNOLOGY

摘要

We examine the real effects of lease-capitalization rules (i.e., standards that require firms to capitalize finance leases) on corporate investment. We show that the introduction of these rules leads to a decrease in investment, which is more pronounced for firms with high reliance on leases. We posit and find that lease capitalization affects investment via a learning channel and a contracting channel. Regarding the first channel, we argue that managers identify areas of overinvestment and activities that should be discontinued or downsized because of the information they collect and analyze to comply with lease-capitalization rules. Accordingly, we find that the effect of lease capitalization is stronger when learning opportunities are higher. Regarding the second channel, we argue that lease capitalization affects investment via its effect on contracts. Accordingly, we document an increase in the likelihood of covenant breaches and a stronger decline in investment for financially constrained firms.